Why this energy executive applauds the EPA

Opinion: The agency has a practical solution to lowering greenhouse gases

By

TomKing

AFP/Getty Images

The U.S. Environmental Protection Agency (EPA) took a big step last week on the issue of climate change, proposing to slash carbon dioxide emissions at the nation’s power plants.

Under the rules, American electricity generators would have to reduce their CO2 emissions by 30% from 2005 levels by 2030. Ordinarily, one might expect a utility executive such as me to be skeptical of this proposal. But I’m supportive. Why? I see this as a practical first move toward a meaningful curb on greenhouse gas emissions — a significant public good. And, from a business perspective, I see lower costs for consumers and great benefits for investors.

In announcing the plan, EPA Administrator Gina McCarthy said: “Climate change, fueled by carbon pollution, supercharges risks to our health, our economy, and our way of life. By leveraging cleaner energy sources and cutting energy waste, this plan will clean the air we breathe while helping slow climate change so we can have a safe and healthy future.”

Is it time to invest in water?

(3:11)

Terre Verde Capital Management's Richard Bookbinder joins Simon Constable on the News Hub to help us understand the potential for investors. Photo: Getty

While the plan is ambitious, I’m confident it can work without hobbling economic growth. The EPA has come forward with a sensible, market-oriented solution. The proposal urges the nation’s utilities and the states that regulate them to work together to contain carbon emissions. And it gives each a lot of flexibility.

For their part, power providers can cut CO2 by choosing from a host of options, such as encouraging greater efficiency; using more natural gas, an abundant and cleaner resource; adopting other energy-generation sources, such as solar, wind power, nuclear or hydro; or implementing other energy-management options.

Regulators, in turn, can tailor their standards to the electricity, economic and environmental needs of consumers; the EPA itself has provided a smart model, customizing its expectations for each state.

The principles behind the EPA’s proposal have already been put to the test in California and in the Regional Greenhouse Gas Initiative (RGGI), a cooperative program in nine Northeastern states.

From 2005 to 2012, CO2 emissions from the power sector in the Northeast dropped more than 40%. We should celebrate this progress, as the region’s economy continued to grow, a fact that undercuts the frequent contention that action on climate change will necessarily cause economic stagnation. And, since RGGI was launched more than six years ago, the retail price of electricity in New England and New York has decreased — so business and residential customers weren’t penalized by environmental protection.

Frankly, we hope and expect to go even further than the EPA plan. National Grid distributes gas and electric power to more than 7 million large and small customers in New York, Massachusetts and Rhode Island, and on Long Island, we generate nearly 4 gigawatts of power from 50 natural gas-fired generation units at four sites. From 1990 to 2013, we have lowered greenhouse-gas emissions by 65%, and we’ve set a target of an 80% reduction from 1990 levels by 2050.

But the proposed rules aren’t simply the case of government intervening in an industry. The EPA recognizes, and has capitalized on, the market forces already at work. The agency has been in deep dialogue with the utility industry, and this proposal shows the EPA has listened.

There’s been massive shift in the energy industry in the past decade, caused in part by the growth in the production and use of natural gas. The amount of electricity generated by natural gas should double from 1990 to 2040, making natural gas the leading fuel for our nation’s power plants and the smart transition fuel as we move to even cleaner sources such as wind, solar, hydro and biogas.

In its proposal, the EPA acknowledges that energy efficiency and demand reduction are important tools we should aggressively develop along with a relentless pursuit of low carbon-generation resources. In any assessment, there is no silver bullet.

Still, the EPA’s progress is cause for optimism. While the new rules aren’t yet complete, they should go into effect in the middle of 2015, and states will have another year to implement them. They are a very good start toward advancing our global environmental health while recognizing our nation’s economic needs. In short, there’s a lot to like here for our customers, communities and local economies. Less carbon and cleaner air — our children will hopefully have cause to be thankful.

Tom King, an executive for more than 25 years with American energy companies, is president of National Grid U.S., based in Waltham, Massachusetts. National Grid provides gas and electric power to 7 million customers in New York, Massachusetts and Rhode Island. Twitter: @TomKingNG.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.